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DECISION NO.

2014-210
September 11, 2014

Subject: Petition of Dr. Benny A. Palma, et al.,


President, Aklan State University, Banga,
Aklan, for review of Adjudication and
Settlement Board Decision No. 2010-061,
dated June 11, 2010, affirming Notice of
Disallowance No. 2004-002-101(03) dated
May 24, 2004, on the payment of increased
extraordinary allowance/per diem to the
Members of the Board of Regents and its
Secretary in the total amount of P78,512.50

DECISION

FACTS OF THE CASE

Before this Commission is the petition of Dr. Benny A. Palma, et al., President,
Aklan State University (ASU), Banga, Aklan, for review of Adjudication and Settlement
Board (ASB) Decision No. 2010-061 dated June 11, 2010, which affirmed Notice of
Disallowance (ND) No. 2004-002-101(03) dated May 24, 2004, on the payment of
increased extraordinary allowance/per diem to the Members of the ASU Board of
Regents (BOR) and its Secretary, in the total amount of P78,512.50.

Records show that ASU Board Resolution No. 05-32-2002 dated April 2, 2002,
authorized the payment to the BOR including the Board Secretary of increased
extraordinary allowance/per diems from P2,000.00 to P5,000.00, chargeable to the
General Fund (GF) and Special Education Fund (STF) of the university. On post-audit,
the Audit Team Leader (ATL), ASU, issued ND No. 2004-002-101(03) dated May 24,
2004, on the ground that the payment of increased per diem is contrary to the policy
adopted under Memorandum dated November 19, 1998, of the Compensation and
Position Classification Bureau (CPCB) of the Department of Budget and Management
(DBM).

On appeal, the ASB affirmed the disallowance, ruling that the BOR lack the
authority to increase the payment of extraordinary allowance/per diem to its members as
the same runs counter to Sections 4 and 18 of Republic Act (R.A.) No. 8292, otherwise
known as The Higher Education Modernization Act of 1997. The ASB further declared
that the Board Secretary, being a plantilla position is not entitled to per diem in view of
Section 12 of R.A. No. 6758, otherwise known as The Salary Standardization Law.

Thus, the instant petition based on the following grounds:

1. The ASB committed an error in declaring the BOR to be without legal

authority to grant the increased extraordinary allowance/per diem to its


officers to be charged the same to the STF of the university;

2. Petitioners should not be required to refund the excess per diem in view of

the doctrine of good faith enunciated in the Blaquera vs. Alcala, G.R. No.
109406, September 11, 1998 (295 SCRA 366).

ISSUE

The issue to be resolved is whether or not the petition for review is impressed with
merit.

DISCUSSION

After a careful evaluation of the facts and circumstances obtaining, this


Commission finds the petition for review bereft of merit.

As to the first ground, this Commission concurs in the finding of the ASB that under the
provisions of R. A. No. 8292, the BOR is not vested with authority to increase the
payment of extraordinary allowance or per diem to its members including the Board
Secretary.

Section 4(b) of R.A. No. 8292 provides:

Section 4. Powers and duties of Governing Boards The governing boards


shall have the following specific powers and duties in addition to its
general powers of administration and the exercise of all the powers
granted to the board of directors of a corporation under Section 36 of
Batas Pambansa Blg. 68 otherwise known as the Corporation Code of the
Philippines;

xxx

(b) to receive and appropriate all sums as may be provided, for the support
of the university or college in the manner it may determine, in its
discretion, to carry out the purposes and functions of the university or
college;

x x x.

Likewise, Section 18(d) of Commission on Higher Education (CHED)


Memorandum Order No. 3, series of 2001, granted the Governing Board (GB) the
following powers and duties:

Any income generated by the university or college from tuition fees and

other charges, as well as from the operation of auxiliary services and land
grants shall be retained by the university or college and may be disbursed
by its GB for instruction, research, extension or other programs/projects of
the university or college. Provided, that all fiduciary fees shall be disbursed
for the specific purposes for which they are collected.

If, for reasons beyond its control, the university or college shall not be able
to pursue any project for which the funds have been appropriated and
allocated under its approved program of expenditures, its GB may
authorize the use of said funds for any reasonable purpose which, in its
discretion, may be necessary and urgent for the attainment of the objectives
and goals of the university or college.

The foregoing provisions state that the BORs authority under the law is limited to
the receipt and appropriation of funds for the support of the university to carry out its
purposes and functions. It does not confer the authority to increase the allowances to its
members. Hence, Board Resolution No. 05-32-2002 is ultra vires or an act in excess of
the authority granted under R. A. No. 8292.

As to the question of the propriety of payment of the increased per diem to the
members of the GB and the Board Secretary, a clarification has been made by the then
Regional Director of DBM Region VI, in his letter dated September 6, 2002 to Dr. Palma.
According to the DBM Regional Director, the per diem of members of the governing
boards of State Universities and Colleges (SUCs) is fixed at P2,000.00. This policy was
made after the request of the Technological University of the Philippines (TUP) for
authority to grant per diemand/or extraordinary allowances to its BOR. The per diem rate
prescribed for the TUP BOR, which became the basis for the per diem in all SUCs
regardless of the level and category is the monthly Representation Allowance and
Transportation Allowance (RATA) of the TUP president under R.A. No. 8522, or the FY
1998 General Appropriations Act, which is P8,000.00 per month or P2,000.00 per
meeting of the BOR. This means that each member of the Board shall receive per diem of
P2,000.00 per meeting attended, or a monthly per diem allowance of P8,000.00. The
computation of the per diem of the TUP President was the rate prescribed in DBM-CPCB
Memorandum dated November 19, 1998 which provides that:

Section 2. The existing practice in determining per diems of the Ex-Officio


Chair and members of the multi-headed entities is based on the
Representation and Transportation Allowance of the full time Chief
Operating Officer (COO) of the Board, Commission, committee, etc. The
monthly RATA of the full time COO is divided by four to arrive at the
allowable per diem per meeting of the chair. The total per diems in a month
shall not exceed the RATA rate. The per diem of the members are fixed at
the RATA of the next lower official in the list contained in the GAA
provision of RATA.

Further, the DBM Regional Director stressed that the Board Secretary is not
entitled to per diem being not a member of the governing board. It is the inherent
function of the Board Secretary to attend Board meetings.

The charging of the increased per diem to the STF of the university is likewise not
proper. Section 4(d) of R.A. No. 8292 provides:

xxx

Such fees and charges including government subsidies and other income
generated by the university or such college, shall constitute special trust
funds and shall be deposited in any authorized government depository bank,
and all interests shall accrue therefrom shall part of the same fund for the
use of the university or college. x x x.

Any provision of existing laws, rules and regulation to the contrary


notwithstanding, any income generated by the university or college from
tuition fees and other charges, as well as from operation of auxiliary
services and land grants, shall be retained by the university or college, and
may be disbursed by the Board of Regents/Trustees for instruction,
research, extension, or other program/projects of the university or college:
Provided, That all fiduciary fees shall be disbursed for the specific purpose
for which they were collected.

x x x.

The above provision is also provided in the cited CHED Memorandum Order,
which states that income of SUCs shall be treated as STF and its use is authorized for
instruction, research, extension, or other program/projects of the university or college.
Clearly, payment of per diem to administrative officers of the university or college like
secretary or members of the governing boards are not included.

As to the second ground, this Commission is of the view that the ruling
in Blaquera vs. Alcala, G.R. No. 109406 dated September 11, 1998, on the presumption
of good faith, is not applicable to the instant case. Petitioners were not in good faith
when they received the increased per diem, considering that they were the approving
officers of the Resolution authorizing the increase.

The Supreme Court ruling in Casal, et al. vs. COA, G.R. No. 149633 dated
November 30, 2006, applies, viz:

The failure of petitioners-approving officers to observe all these issuances


cannot be deemed a mere lapse consistent with the presumption of good
faith. Rather, even if the grant of the incentive award were not for a
dishonest purpose as they claimed, the patent disregard of the issuances of
the President and the directives of the COA amounts to gross negligence,
making them liable for the refund thereof (Underscoring supplied)

Applying the ruling to the instant case, the members of the BOR who are
signatories to the Board Resolution cannot be considered in good faith since from the
very beginning, they were not vested with authority to grant the same. The provisions of
the law and DBM issuances are very clear as to the amount of allowable per diem and the
funding thereof.

Likewise, the Board Secretary, although not signatory to the said Resolution, still
cannot take refuge under the doctrine of no refund based on utmost good faith because
a Board Secretary is not entitled to receive per diem and having received what is not
pertaining to her, her liability to return the same is necessary. Nevertheless, her liability is
only up to the amount she received and not solidary with the rest of the other
disallowances.

RULING

WHEREFORE, premises considered, the petition of Dr. Benny Palma, et


al., President, ASU, Banga, Aklan, is hereby DENIED for lack of merit. Accordingly,
ND No. 2004-002-101(03) dated May 24, 2004, on the payment of increased
extraordinary allowance/per diem to the Members of the ASU Board of Regents and its
Secretary in the total amount of P78,512.50, is AFFIRMED.